KEY POINTS
- South Africa cut its fuel levy by 3 rand per litre for April to cushion steep petrol and diesel price increases.
- Government will forgo about 6 billion rand in revenue but plans to recover it through other measures while considering broader economic support.
- Fuel prices are still expected to rise sharply, with petrol up about 15% and diesel 40%, amid global tensions and inflation risks.
South Africa will temporarily reduce its fuel levy for April in a bid to limit sharp increases in petrol and diesel prices, following mounting pressure from labour unions and business groups for government intervention. The finance and petroleum ministries said the short-term measure would cost about 6 billion rand in forgone tax revenue, which authorities plan to recover through other mechanisms.
Despite the levy reduction, regulated fuel prices are still expected to climb significantly in April, with petrol projected to rise by around 15% and wholesale diesel by about 40%. Officials added that broader support measures for households and key sectors are being considered.
The general fuel levy will be cut by 3 rand per litre for April, lowering the levy to 1.10 rand per litre for petrol and 0.93 rand per litre for diesel. Finance Minister Enoch Godongwana said the government will continue monitoring developments in the Middle East conflict and may extend relief into May and June if necessary, although he cautioned the intervention is unlikely to be sustainable beyond June.
The move mirrors a similar relief introduced in 2022 after the outbreak of the Russia-Ukraine war, when authorities implemented temporary reductions that were gradually phased out.
Rising fuel costs threaten inflation outlook
South Africa’s central bank has already warned of growing inflation risks, forecasting fuel inflation above 18% in the second quarter. The rand has weakened nearly 7% against the dollar since late February, when U.S. and Israeli strikes on Iran heightened global energy market uncertainty.
As Africa’s most industrialised economy imports most of its petroleum products, it remains highly vulnerable to global oil price swings. The country adjusts fuel prices monthly using a formula based on global crude prices, exchange rates and domestic taxes, with changes taking effect on the first Wednesday of each month.
